Udi’s Granola is wrapping up its fourth year by flying on Frontier Airlines, hitting Walmart shelves and estimating $3 million in sales this year.

The Denver company, an arm of Udi’s Foods, tallied $500,000 in sales of its all-natural granola in 2005, its first year in business.

“The (granola) market, from our point of view, is wide open, and we don’t plan to stop,” said Udi Bar-on, owner and namesake of Udi’s Foods. “We recognized we have a unique product, baked and not dried.”

This year, besides Wal-Mart and Frontier, the company also signed deals with TJMaxx/Marshalls and created three new flavors: Banaberry, Nuggets and Muesli. The granola is displayed in a gourmet-food section at the discount retailers.

Udi’s Granola, now in 50 states and Canada, was also just named one of the 10 best-selling granolas in the nation, according to Spins, which provides data on the natural-products industry. And in October, it was named an editor’s choice in Gourmet Retailer Magazine.

“To be able to be a top-10 player in three or four years is not the culmination of this story because we are still only about 5 or 6 percent marketplace,” partner Eric Clayman said. “We see a lot of room to grow.”

Udi’s Granola was opened with $700,000 in investment funds and continues to be a self-funded private company.

In 2005, the product was in 150 locations; this year, it is in 3,000 locations.

Granola is considered a growing category in grocery, especially with the recent purchase of Bare Naked by Kellogg’s, said Rick Shea, a grocery-industry expert and founder of Shea Marketing Consultants in Minneapolis.

“It’s a category that has been positive because of its health connotations,” Shea said. “It’s fairly small in size and nature. The key is to go national.”

Shea called Udi’s move into TJMaxx/Marshalls and Frontier good for sampling purposes, to allow consumers to try it.

The Wal-Mart deal is a huge score because of volume and visibility by other retailers.

“Everybody pays attention to Wal-Mart,” he said. “That shows they are a player, and a key retailer has seen the benefits of their brand.”

Udi’s Granola is part of Udi’s Foods, an enterprise that includes Udi the Sandwich Man catering, Udi’s bakery, Udi’s pastries and the Granola bakery. Most recently, Udi’s opened a gluten-free bakery.

The granola was created when the catering business wanted to make its own. Partner and pastry chef Yasmin Lozada-Hossim produced her Venezuelan grandma’s recipe, and Udi’s Granola was born. Soon it sold at farmer’s markets before moving to Costco, King Soopers and Whole Foods.

The trick to Udi’s Granola, Clayman said, is low baking temperature for a long period and a bakery versus a factory process.

“From the beginning process, it is all by hand,” said Martha Cortez, manager of production and quality control. “Our process is very original, and we maintain that specialty.”

Udi’s accounts for 40 percent of business for Jeff Johnston, owner of Colorado Honey Co., his family’s beekeeping company, based in Loveland.

“I had to order a new machine in anticipation of their needs. I rented another building because of them,” Johnston said. “I basically work for Udi’s, is the way I look at it.”

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